SSE interim profits to fall

British energy utility SSE - which trades in Ireland as SSE Airtricity - has warned that the contribution from its first-half profits to annual results would be significantly lower than previously expected after payments under Britain’s back-up power scheme were delayed.

An EU court ruling last year forced Britain to halt payments under its capacity market scheme, which pays generators to be available during periods of high demand, pending a review by the European Commission.

SSE said the continuing suspension of the payments meant the company was unable to recognise pending payments totalling £148m (€167m). The proportion of SSE’s first-half adjusted operating profit in 2019/20 is likely to be just one-fifth of the full year total, versus 35% the company typically books in, SSE said.

The European Commission launched the review of Britain’s capacity market scheme in February but industry experts have said this could take 12 months to complete.

Britain’s government has said it expects the scheme to be reinstated and that it will make retrospective payments to companies.

SSE also said profit at its electricity distribution business would decrease by £25m to £375m in the current year due to lower-than-expected volumes and a rise in network faults.

The company said it was making good progress in the planned sale of its gas production assets, which meant this business could be considered “held for sale” and in turn reduce adjusted earnings per share by up to 5 pence in the current year.

SSE currently expects its adjusted earnings per share for the year to be around 85-90 pence, higher than the 67.1 pence a share it reported in the comparable period.

“The key months of our financial year are still to come, and working to mitigate the economic, regulatory and political uncertainties arising from the Brexit process will continue to be a key priority for SSE,” the company said.

SSE earlier this month also announced plans to sell its UK retail arm to OVO Energy in a deal valuing the business around £500m. The group has no plans to sell its Airtricity business in Ireland.

SSE Airtricity has seen is Irish customer base decline by around 5% in the past two years.

The company closed 2018 with 740,000 customers across the island of Ireland, down from 750,000 at the end of 2017 and 790,000 at the end of 2016. SSE is looking to be a significant player in the Irish wind energy market,

- Reuters and Irish Examiner